Currency War Between China & U.S

There has been several claims by Washington that the recent economy calamity is cause by China RMB devaluation. The claim pointed that undervalue China RMB tend to create imbalance trade between the two nations therefore it is the primary cause to budget deficit in U.S. Recently, Washington, lead by secretary of Treasury Timothy Geithner has putting a lot pressure to China to increase the value of RMB. The U.S believe that will bring back a more healthy and vibrant competitive market, and balancing the widely gap of trade imbalance within the 2 nations as well internationally. Still, there are many controversy on the hypothetical theory by Washington. Taking a look at the condition of market from the perspective of economic study, there are more than just currency exchange problem. The creative destruction from the financial market - derivatives such as CDS are still prevailed and preferred by most investor might create another wave of financial breakdown. The interest rate are still all time low in record in most of the nations across the globe especially U.S that will flood billion and trillion of cheap debt into market therefore creating a ripple effect of big inflation wave which soon or later will hit the shore. Oil price is shoring as other commodities high price indicating the effect from flooding cheap credit to the market is become more serious. Government pension and social security plan that on the index of stock market with mandatory withdraw rule attached on it will cause a major break down in the market. Aging population which the younger worker are no long able to support the baby boomer age retiree will burden the society, taxes will sky rocket. Unemployment hit all time high record at prevalence of 9.6% in U.S. is the major problem. On the outlook of current economy condition, the low RMB actually is an buffer to the major impact of financial perfect storm that about to hit shore. Without the low RMB, there will be no more cheap products and services available in the market, therefore hyperinflation will prevail. The low RMB is a key factor in today market to "buy time" for all nation across the globe to prepare and restructure the financial policy in order to face the inevitable incoming real financial perfect storm. On Octorber 2010, China had announced that they will increase the flexibility exchange rate of RMB gradually, it shown for the very first time in human history after the 1929 financial disaster, human race are about starting to see a real financial prefect storm that might bring down the whole world economy in a major way.